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(Alliance News) - Harworth Group PLC on Tuesday reported a drop in interim profit as value gains contracted, citing subdued consumer demand due to higher mortgage rates.
The company focused on the regeneration of land and property for sustainable development and investment said EPRA net disposal value as at June 30 declined 13% to 195.7 pence per share from 224.7p a year prior.
Pretax profit in the first half of 2023 plummeted to GBP4.5 million from GBP98.8 million.
"In residential markets, consumer demand remains subdued, as a result of higher mortgage rates, challenging affordability and lower consumer confidence, albeit interest rates appear to be nearing their peak. Reporting from housebuilders suggests reduced construction volumes over the coming year and a more selective approach to land acquisitions," Harworth said.
Notably, value gains fell sharply to GBP7.5 million from GBP110.3 million.
The company declared an interim dividend of 0.444p per share, up 9.9% from 0.404p a year ago.
Looking ahead, Chief Executive Officer Lynda Shillaw said: "Harworth is a long-term through-the-cycle business, and we remain confident that our strategy to become a GBP1 billion business by 2027 will deliver long-term value. Our significant landbank, specialist skillset and strong balance sheet position us well to maximise the significant value embedded in our sites."
The company said that the economic outlook in the UK "is likely to remain challenging in the near term, although there are encouraging signs that inflationary pressures are easing and interest rates are approaching their peak. For the industrial & logistics market, the structural drivers of demand remain largely intact, while supply remains constrained, particularly for grade A energy efficient buildings and across our regions where supply represents less than a year of demand".
Harworth shares were 0.9% lower at 104.56 pence each on Tuesday afternoon in London.
By Tom Budszus, Alliance News reporter
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